Rocket Fuel Inc

GROUP 1 - SECTION B

KRUTHIK REDDY - 19PGP076

MITHUN CHANDAR -19PGP082

NARENDRAKATTA -19PGP090

SINDHUJA REDDY -19PGP110

 Q.1 Was the advertising campaign effective?

Did the additional consumers convert as a result of the ad campaign?

Users Not Exposed to Ads Exposed to Ads Grand Total

Not Converted 23104 550154 573258

Converted 420 14423 14843

Grand Total 23524 564577 588101

User Condition Conversion Rate

Exposed to Ad 2.55%

Not Exposed to Ad 1.79%

Increase in converted users: 2.55% - 1.79% = 0.76% increase in converted users with the ad

Q.2. Was the campaign profitable?

2.A How much more money did TaskaBella make by running the campaign (excluding the
advertising cost)?

It is given in the case that each converted customer is worth $40.

Total no of converted customers =14843.

Total worth of all converted customers = $40 * 14843 = $5,93,720.00

Total no of impressions= 14597182 (from CSV)

Total cost of advertising = $9 * 14597182 / 1000 = $1,31,374.38

Net profit = Total worth of all customers – Total cost of advertising

= $5,93,720.00 - $1,31,374.38

= $4,62,345.62
2.B What was the cost of the campaign?

It is given in the case that CPM is $9.

Total no of impressions= 14597182 (from CSV)

Total cost of advertising = $9 * 14597182 / 1000 = $1,31,374.38

2.C Calculate the ROI of the campaign. Was the campaign profitable?

Total cost of advertising = $1,31,374.64

Profit generated from each sale = $40
No. of conversions required to breakeven the advertising cost = $1,31,374.64 / $40 = 3284.366
~ 3285 conversions to be made
Total no. of conversions made = 14843
Hence, as the actual number of conversions made were more than the breakeven, the campaign was profitable.
Rocket Fuel has shown that there is an addition of 0.76% in the conversion rate due to the advertising campaign
(From Q1).
Current
2.55% conversion rate corresponds to 14843 conversions and a profit of $4,62,345.36
Estimated
Total Users = 588101
Additional Conversions created due to the ad campaign = 588101*0.76% = 4470
Additional Profit obtained due to the additional conversions = ($4,62,345.36/2.55%) *0.76% = $137797.05
As the additional profit obtained because of running the ad campaign exceeds the total advertising cost, the
campaign is profitable.
ROI of the campaign = (Net Profit/Cost of investment) *100
= ($1,37,797.05 - $1,31,374.64)/ $1,31,374.64 * 100 = 4.89%

2.D What was the opportunity cost of including a control group; how much more could have
TaskaBella made with a smaller control group or not having a control group at all?

Users Exposed to Ads Not Exposed to Ads Total

Converted 14,423 420 14,843

Not Converted 550,154 23,104 573,258

Total 564,577 23,524 588,101

 Conversion rate in the exposed group = (14423/564577) *100 = 2.55%
Conversion rate in controlled group = (420/23524) *100 = 1.79%
Due to the inclusion of a controlled group, TaskaBella Inc is losing out on 2.55% - 1.79% = 0.76% of the
conversions which can be considered as the opportunity cost.
No. of conversions lost = 0.76% of 23524 = 179 conversions lost
Total Opportunity Cost of having a control group = 179*40 = $7160
However, if there is no control group, then TaskaBella will not have any reference data on how many
customers will buy the new handbag without digital ads. Results of the control group will also serve as a
measure of the effectivity of TaskaBella’s current digital marketing efforts.

Q3. How did the number of impressions seen by each user influence the effectiveness of
advertising?

3.A Create a chart of conversion rates as a function of the number of ads displayed to the
users. Plot conversion rates for those who were in the control group and for those who were
exposed to the ad. Group together number of impressions as necessary to obtain a meaningful
plot. (Conversion rate means the percentage of unique users who made a purchase)

The impressions are grouped in the range of 25. For each range, the number of exposed group individuals, the
number of converted users, and the conversion rate is tabulated.
A graph is plotted with the conversion rate against the number of impressions for the exposed group.

Conversion Rate of Exposed Group

1.00
0.90
0.80
0.70
Conversion Rate

0.60
0.50
0.40
0.30
0.20
0.10
0.00
201-225

901-925

1776-1800
1-25
51-75
101-125
151-175

251-275
301-325
351-375
401-425
451-475
501-525
551-575
601-625
651-675
701-725
751-775
801-825
851-875

951-975
1001-1025
1051-1075
1101-1125
1151-1175
1226-1250
1301-1325
1351-1375
1401-1425
1626-1650
Impression Range

The impressions are grouped in the range of 25. For each range, the number of control group individuals, the
number of converted users and the conversion rate is tabulated. A graph is plotted with the obtained
conversion rate against the number of impressions for the control group

Conversion Rate of Control Group

0.60

0.50

0.40
Conversion Rate

0.30

0.20

0.10

0.00

Impression Range
 3.B What can you infer from the charts? In what region is advertising most effective?

• For the exposed group, the conversion rate is directly proportional to the number of impressions i.e the
conversion rate increases as the number of impressions increases until some point.
• After the threshold, the impressions might lead to banner blindness as evident in the above graphs.
• On average, for the control group also the conversion rate increases as the number of impressions
increases. Exposure to more than 600 impressions doesn’t have any impact of conversions and the
conversion rate becomes zero.
• For those exposed to ads, the effective number of impressions is between 50 to 1000 impressions per user

3.C What do the above figures imply for the design of the next campaign assuming that
consumer response would be similar?

• An increase in the number of ad impressions gives a positive result. But impressions per user should not
exceed 1000 as it would lead to banner blindness.

Q.4 How does consumer response to advertising vary on different days of the week and at
different times of the day?

4.A Create a chart with the conversion rates for the control group and the exposed group as a
function of the day of the week when they were shown the most impressions.

The total number of unique users who viewed the ads on a day of the week is mentioned in the table below.
The table contains data of both the exposed group, and the control group.

Total Impressions
Mon Tue Wed Thu Fri Sat Sun
Exposed Group 83571 74572 77418 79077 88805 78802 82332
Control Group 3502 2907 3490 3905 3803 2858 3059

The total number of converted users on the day of the week is mentioned in the table below. The table
contains data of both the exposed group and the control group.
Conversions
Mon Tue Wed Thu Fri Sat Sun
Exposed Group 2778 2270 1963 1711 1995 1679 2027
Control Group 79 42 55 78 62 40 63
 The conversion rate is calculated for both the exposed group, and the control group. Conversion rate means
the percentage of unique users who made a purchase, which is indicated as percentage below.

Conversion rates (in %)

Mon Tue Wed Thu Fri Sat Sun
Exposed Group 3.324 3.044 2.536 2.164 2.246 2.131 2.462
Control Group 2.256 1.445 1.576 1.997 1.630 1.400 2.059

The obtained data of conversion rates is plotted in bar graphs separately for both the exposed group and the
control group.

Exposed Group
3.500% 3.324%
3.044%
3.000%
2.536% 2.462%
2.500% 2.246%
% Conversion Rate

2.164% 2.131%
2.000%

1.500%

1.000%

0.500%

0.000%
1 2 3 4 5 6 7
Day of the week

Control Group
2.500%
2.256%
2.059%
1.997%
2.000%

1.576% 1.630%
% Conversion Rate

1.445% 1.400%
1.500%

1.000%

0.500%

0.000%
1 2 3 4 5 6 7
 4.B Create the same chart for hours within a day (excluding the period between midnight and
8 am).

The total number of unique users who viewed the ads in an hour of the day is mentioned in the table below.
The table contains data of both the exposed group and the control group.

The total number of converted users in an hour of the day is mentioned in the table below. The table contains
data of both the exposed group and the control group.

Impressions
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Exposed Group 16968 29802 37454 44149 45238 45485 43779 42855 35963 33605 31052 29169 27846 28895 25515 19547
Control Group 659 1202 1485 2061 2060 2170 1869 1828 1604 1383 1271 1183 1077 1081 917 619

The conversion rate is calculated for both the exposed group, and the control group.

Conversions
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Exposed Group 337 582 818 992 1092 1140 1251 1279 1111 959 853 782 843 843 675 449
Control Group 7 13 20 30 35 36 30 46 45 28 32 29 19 23 15 8

The obtained data of conversion rates is plotted in bar graphs separately for both the exposed group and the
control group.

Conversion rates
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Exposed Group 1.986% 1.953% 2.184% 2.247% 2.414% 2.506% 2.858% 2.984% 3.089% 2.854% 2.747% 2.681% 3.027% 2.917% 2.646% 2.297%
Control Group 1.062% 1.082% 1.347% 1.456% 1.699% 1.659% 1.605% 2.516% 2.805% 2.025% 2.518% 2.451% 1.764% 2.128% 1.636% 1.292%

Exposed Group
3.500%
3.089%
2.984% 3.027%
2.917%
3.000% 2.858% 2.854%
2.747%
2.681% 2.646%
2.506%
2.414%
2.500% 2.297%
2.247%
%Conversion Rate

2.184%

1.986% 1.953%
2.000%

1.500%

1.000%

0.500%

0.000%
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Hour of the day
 Control Group
3.000% 2.805%
2.516% 2.518%2.451%
2.500%
2.128%
2.025%
2.000%
%Coversion Rate

1.699%1.659% 1.764%
1.605% 1.636%
1.456%
1.500% 1.347% 1.292%
1.062%1.082%
1.000%

0.500%

0.000%
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Hour of the day

4.C What days/ hours is advertising most / least effective?

From the data mentioned in 4(a) and 4(b):

Most effective day Least effective day

Exposed Group Monday Saturday

Control Group Monday Saturday

Most effective hour Least effective hour

Exposed Group 16 9

Control Group 16 8